Blog : BOARD TALK

The topic of wider diversity - beyond gender - is at last beginning to move to centre stage in the UK's listed businesses, according to a report just out. A review of the annual reports of some 308 FTSE 350 companies finds 76% of companies mentioning aspects of board diversity other than gender - up from 56% in 2015.

This annual corporate governance review from professional services firm Grant Thornton UK LLP comes soon after the UK government-sponsored review by Sir John Parker, Chairman of Anglo American, on the lack of ethnic representation in Britain's boardrooms. It, in turn, came virtually alongside a renewed push on gender representation via the Hampton-Alexander Review - the two were covered together by me here on Forbes.

As a Chairman with exhaustive experience of Britain's boardrooms, Sir John is well aware of the potentially sensitive nature of ethnic diversity for some in senior positions. He gave me an interview around the Parker Review recently, for the launch of Board Agenda early next next month: look out for it at the ICGN conference.

However, as Grant Thornton's review consists of what is mentioned in annual reports, presumably because companies feel they should, I would think it is not necessarily in itself reliable on the extent to which this issue will be addressed.

On the other hand, the analysis may be more accurate in its suggestion that shareholder engagement is on the slide. "Only 36% of businesses clearly demonstrate how they engage with shareholders: down from 55% in 2015, and the lowest it has been in five years" says its Governance Institute in its report.

It finds that 62% of FTSE 350 companies are now in full compliance with the UK Corporate Governance Code. The Review suggests that FTSE 100 constituents are more likely to be fully compliant (72%) than their FTSE 250 counterparts (57%).

57% ? Really - not that impressive, FTSE 250.

The report finds improvements in many areas, but it highlights a number of shortcomings amongst the FTSE 350's reporting. Succession planning is identified as an area for improvement, with only 15% of companies outlining detail on their considerations and plans for future succession. It also says only 20% of companies provide any real insight into their organisational culture.

Remuneration, it says is "is being addressed in a more holistic way, with 65% of companies now using non-financial metrics in their executive performance-based remuneration (from 46% in 2015)."

Simon Lowe, Grant Thornton partner and Chair at the Governance Institute, has an interesting comment.

"In this post-Brexit period of uncertainty, with the UK Government turning the heat up on wider employee engagement and corporate accountability, boards need to start taking an honest view as to whether they truly embrace the Code's principles" he sid.

"In the early years of this decade, the UK’s regulator, the FRC was able to head off the European Commission’s inclination to introduce more prescriptive governance regulation. The irony is that if more companies do not start fully embracing the Code as it stands, recognising their responsibilities to a wider audience than just shareholders, and giving more informative disclosures, then we may well find that it is our own government who steps in to replace principles with prescription" he added.